An apparatus or method for upstream label allocation on LANs for multipoint (MP) label switched paths (LSPs). In one embodiment of the method, a first router receives a first incoming labeled data packet, wherein the first incoming labeled data packet comprises a first data packet and one or more first labels. The first router creates a first outgoing labeled data packet, wherein creating the first outgoing labeled data packet includes the step of swapping the one or more first labels of the first incoming labeled data packet with a context label and a forwarding label, wherein the first outgoing labeled data packet comprises the first data packet, the context label, and the forwarding label. Ultimately, the first router transmits the first outgoing labeled data packet to second and third routers via a LAN.